After the 2008 financial crisis, the state of Qatar has been investing extraordinarily in the luxury industry.
Qatar’s sovereign wealth fund acquired Harrods in 2010 for £1.5bn and invested £107.8m into the business in 2012. More recent acquisitions include the buying of Italian fashion brand Valentino for £550 million by Mayhoola, an investment group backed by the Qatari Royal family and a private Qatari investment group taking a stake in Anya Hindmarch for £70m.
This trend is likely to continue in the coming years as S&P said that Qatar is one of the wealthiest economies with GDP per capita estimated at $98,000 in 2012 and expects the government to continue to invest abroad through the Qatar Investment Authority.
The QIA already owns stakes in German carmakers Volkswagen, Porsche, US-based jewellery retailer Tiffany’s and LVMH, the French luxury group which owns Louis Vuitton.
The Qataris should invest regardless China’s demand for luxury goods slowdown. According to the FT, Chinese shoppers are reluctant to spend on some luxury brands such as Hugo Boss but “absolute” luxury brands like Richemont and LVMH keep posting positive revenues. The threat doesn’t seem to affect the healthy investments coming from the Middle East and particularly from Qatar which has risen its shares in such companies.